Below are the
results of a nationwide survey of buyers and non-buyers of Long Term Care insurance,
complied by the Health Insurance Association of America. Nearly 3,000 purchasers,
pulled from a dozen carriers (representing about 80% of the in-force business), are
surveyed by mail and phone and some 600 non-buyers were surveyed by phone. Previous
versions of these studies were also conducted in 1995 & 1990.
50% OF NON PURCHASERS DO PURCHASE
Over 50% of the people identified as non-purchasers were actually LTCI purchasers
someplace else. Clearly, a majority of purchasers are now comparison shopping.
Approximately 68% of purchasers said they compared or analyzed policy features before
50% OF INCREASE IN BUYERS AT WORK
Some 35% of responding buyers reported still being actively at work, compared to 23%
in a similar 1995 survey. This represents an over 50% increase.
50% SPEND 1-3% OF INCOME
The survey also reported a number of respondents who are spending less of their
income on LTCI. Over half of respondents are spending between 1 and 3% on
LTCI. The average annual premium is $1,677. Spending for inflation protection
did not seem to vary much until income levels exceeded $50,000 (and then they were willing
to spend about 10% more). Also to keep premiums affordable, individuals over age 75
tend to reduce the duration of coverage. Some 85% of respondents have benefits
periods of 4 years or shorter. By comparison, for purchasers ages 55 to 64, 42% of
purchasers take lifetime protection.
50% OF NON PURCHASERS ARE RISK AWARE
Just over half (55%) of non-buyers responding to the survey know the fact that the
likelihood of a nursing home stay is great than 50%. The reasons given by
non-purchasers for not obtaining coverage included: cost (54%), waiting for better
policy (29%), and hard to choose (18%). Non purchasers, according to the study, in
general were older (age 71 vs. average purchaser who is age 67). Since health
(underwriting) issues were excluded, this could be an important consideration. The
cost issue continues to suggest the perception that LTCI is costly.
INCOME + ASSETS + EDUCATION= SALE
Compared to five years ago, purchasers reported increased levels of both income and
assets. This could be attributable to more dual-income households or the increased
value or retirement assets (thanks to the growth of equities over the past five
years). For example, purchasers reporting assets of $30,000 or less accounted for
28% of policies sold in 1995. In 2000, they accounted for only 11%. Also,
current buyers are significantly more likely to be college-educated.
INFLATION PROTECTION TRENDS
The survey notes continued increases in the purchase of policies with inflation
protection-especially among younger buyers. The breakdown of options selected
included: 17% simple inflation protection; 22% compound; 2% indexed inflation.
Among buyers between the ages of 55 and 64, 56% purchased inflation protection. That
compared to only 14% fro ages 75+. Individuals with incomes over $50,000 were much
more likely to purchase inflation protection than those with lower amounts.